HR Planning - Week 1 - Strategic Management PDF

Strategic HR Planning - Introduction 1 Strategic HR Planning…… A formal roadmap that spells out where your organization wants to reach over the next several years, and how it will get there. It isn’t a rulebook, but a training plan that spells out a method for r...

Strategic HR Planning - Introduction 1 Strategic HR Planning…… A formal roadmap that spells out where your organization wants to reach over the next several years, and how it will get there. It isn’t a rulebook, but a training plan that spells out a method for reaching a goal, taking into account organizational goals, market conditions, and newly available technology. 2 Strategic HR Planning…. A strategic HR plan will show: the current job market the positions most important to meet and successfully implement the organizational strategic plan the technology that can get you there faster some potential roadblocks, and how to get around them. 3 Action – Watch this video 4  With this background, let’s get into the Course…. 5 Learning Outcomes Discuss why managers need to examine the human resources implications of their organizational strategies Discuss why human resources managers need to understand strategy Understand the various terms used to define strategy and its processes Describe organizational strategies, including restructuring, growth, and stability Define business strategy and discuss how it differs from corporate strategy. Discuss the steps in the strategic planning process 6 Action: What is an Organization? By this time, you have viewed the Course Introduction and Overview, you have viewed the video on slide # 4, and the slides leading up to this current slide. Action: In your own words, how would you answer the question posed above? 7 Strategic Human Resources Management Strategic management of people within organizations affects important organizational outcomes such as survival, profitability, customer satisfaction levels, and employee performance. 8 A Need for Strategic HRM Managers need to examine the human resources implications of their organizational strategies, as well as the various terms used to define strategy and its processes. HRM programs and policies enable and align to meet organizational strategies. Strategic HRM is needed in any sized company, whether public or private, and in any location across the country or globally 9  So, it is not just about what the HR Department does: more importantly, how do the HRD’s programs, policies and practices lead to organizational efficiency and successful productivity? The “common” factor that binds all the departments together is the organization’s strategy 10  The formulation of organizational objectives, Strategy competitive scopes, and action plans for gaining advantage Plan for how the organization intends to achieve its goals [Game plan] 11 Descriptio ns of Strategy: Overview Common Terms Related to Concepts of Strategy 12 Strategy …….. Many of these strategic terms (on this slide and the next one) form the building blocks of this Course. Strategy o A declaration of intent​ Strategic Intent o A tangible corporate goal; a point of view about the competitive positions a company hopes to build over a decade​ Strategic Planning o The systematic determination of goals and the plans to achieve them 13 Strategy..... Strategy formulation: The entire process of conceptualizing the mission of an organization, identifying the strategy, and developing long-range performance goals​ Strategy implementation: Those activities that employees and managers of an organization undertake to enact the strategic plan, to achieve the performance goals​ Objectives: The end, the goals Plans: The product of strategy, the means to the end​ Strategic plan: A written statement that outlines the future goals of an organization, including long-term performance goals​ Policies: Broad guidelines to action, which establish the parameters or rules 14 Strategic Planning and Predicting the Future Planning for the long term is difficult. Strategic planners look at three- to five-year terms. Plans are formulated to be somewhat flexible so they can respond to change in the environment. Strategic planning is a dynamic process. 15 Action From the text: Read the Introduction: Strategic Management at The Bay and watch video 1.1 (also about The Bay) Identify the changes in strategy, and the reasons for the changes. Read also HR Planning Today 1.2.1 Turnaround at McDonalds. What were some of the changes McDonalds made? Why? 16 A Need for Strategic HRM The text provides additional cases of companies that have experienced scenarios similar to those discussed in the activity from the previous slide. See section 1.1 – A Need for Strategic HRM and review”: Rogers/Shaw merger Closure of cannabis greenhouses Robots replacing workers (includes video) The ‘fate’ of gig workers A company named Strawhouse – phenomenal growth! Canada’s tough labor market Remote working (has an accompanying image – examine) 17 The “How” of Strategic Development Every organization needs to plan its’ strategy for its’ future operations. In the strategy formulation process, the objective is to determine the organization’s corporate and business strategies. Once these have been determined, individual departments are tasked with the implementation process – first at the functional level, then down to the operational level. In this way all levels within the organization are aware of the organization’s strategic plan. 18 Strategic Road Map Business Strategy Line/ Functional Department Strategy Strategies Corporate Strategy Your chosen - Restructure: turnaround, divest, liquidate strategie - Growth: acquire, expand, international s - Stability: milk it until it dies In strategy, just as important as what we will do is what we won’t do! Question... Which principle would an organization use if the organization wished to pursue a tangible corporate goal that it wanted to build over a decade? a) Business implementation b) Strategy development c) Strategic intent d) Policies Copyright © 2016 by Nelson Education Ltd. 20 Events to Stimulate Change in Strategy​ New CEO Threat of a change in ownership​ External intervention Performance gap Strategic inflection point 21 Strategy is not static! Emergent strategy: The plan that changes incrementally due to environmental changes Discarded strategy: Deemed inappropriate due to changing circumstances Intended strategy: The formulated plan Realized strategy: The implemented plan Logical incrementalism – to be discussed in class.... 22 Strategic Process 23 Adapted from Mintzberg (1987) Strategic Planning Team 24 Composition of the Strategic Planning Team Developing the organization’s strategy requires a team effort. Here is the composition of the team: CEO + All senior departmental managers: - Production - IT - Customer Services - Finance - HR - Marketing etc. etc. 25 Strategic Types [under strategy formulation] 26 Basic Strategies Corporate Business Strategies: Strategies: Plans to build a Organizational- competitive focus level decisions that in one line of focus on long-term business​ survival​ 27 Corporate Strategies: An Overview 28 Corporate Strategies Examine questions about which competitive strategy to choose Three types of corporate strategy: Restructuring Growth Stability The choice of strategy is dependent on i) where the organization is now, and ii) what is happening in the industry 29 Corporate Strategies: Restructuring Strategies Turnaround strategy: An attempt to increase the viability of an organization Divestiture: The sale of a division or part of an organization Bankruptcy: A formal procedure in which an appointed trustee in bankruptcy takes possession of a business’s assets and disposes of them in an orderly fashion Liquidation: The termination of a business and the sale of its assets. Watch the Target video at Video 1.5 in the text (2.11 mins.) 30 Corporate Strategies: Growth Strategies Incremental growth: Can be attained by expanding the client base, increasing products/services, changing the distribution networks, or using technology International growth: Seeking new customers or markets by expanding internationally is another growth option Acquisition: The purchase of one company by another Merger: Two organizations combine resources. 31 Question..... When McDonald’s sales were down by 5 percent and profits were down by 11 percent, the company implemented a number of strategies to increase its profitability and competitiveness. These included making its food healthier, incorporating regional food interests abroad, and diversifying its product line to include McCafé coffees and Chipotle BBQ. In 2010, McDonald’s added smoothies to its menu. What strategy was McDonald’s using to increase its viability? a) Divestiture – Restructure Strategy (part of getting rid of) Diverse – Going to other area b) Growth - c) Corporate – Restructure Strategy d) Turnaround 32 Stability Strategies Maintenance strategies where companies do not wish to see their companies grow and so their strategic HRM practices remain constant Status quo: do not wish to see their companies grow; content to keep market share; doing what it has been doing Do-nothing: don’t do anything different; make no changes Pause and proceed with caution: temporary strategy until environmental conditions are more favorable for growth Harvest: choose to milk the investment as current profitable situation will not last forever 33  Business Strategies The determination of the basic long-term goals and objectives of an organization and the adoption of courses of action and the allocation of resources necessary to achieve the goals Concerns itself with how to build a strong competitive position A business strategy is the action plan for a single line of business to gain competitive advantage Many large organizations (conglomerates) operate several businesses under either the same, or different names. Each business will have its’ own business strategy. ……we will examine these in greater detail later 34 Differentiating Between Corporate and Business Strategies To be discussed in class. Complete using the Internet 35 The Strategic Planning Process 1. Establish the mission, vision, and values.​ Reason why the org. exist 2. Develop objectives.​ Where they want to go, What they want to do. 3. Analyze the external environment.​ 4. Identify the competitive advantage.​ Intangible resource 5. Determine the competitive position.​ How the org. going to compete. 6. Implement the strategy.​ 7. Evaluate the performance.​ 36  1. Establish the Mission, Vision, Values [MVV] Mission statement: Read about Loblaw’s in HR Planning Today 1.3.2 An articulation of the purpose of the organization and the value it creates for customers Vision statement: ↳ The basic beliefs that govern individual and group behavior in an organization. It defines an organization’s long-term goals uniting the organization’s efforts Values: The basic beliefs that govern individual and group behavior in an organization. Having a values statement enables the organization to a) convey 37 a sense of identity for employees b) generate 2. Develop Objectives The management team develops short-term objectives to realize its high-level mission, vision, and value Objectives are an expression, in measurable terms, of what an organization intends to achieve Goals can be classified as hard or soft. Hard goals always include numbers, usually relative to performance last year, or to competition. Statements are action-oriented and specific 38 3. Analyze the External Environment No organization exists in a vacuum: Managers must be aware of threats and opportunities in the external environment Managers (including HR managers) should scan and monitor technology, laws and regulations, the economy, sociocultural factors, changing demographics, environmental, and competitive factors Managers use this information to make reactive and proactive changes to the strategic plan. 39 4. Identify the Competitive Advantage The characteristics of a firm that enable it to earn higher rates of profit than its competitors Resources that allow the firm to perform more effectively or efficiently than competitors fall into three categories – Tangible assets: assets that have substance and can be consumed (e.g. land, cash, buildings) – Intangible assets: assets that are not concrete, such as reputation, goodwill, and “human” resources (resources that cannot be easily converted to cash) – Capabilities: collective skills, abilities, and expertise of the organization. See next slide 40 Emerging Capability Agility ↳ The organization's capacity to respond, adapt quickly, and thrive in changing environments, and the ability of organizations to build and reconfigure resources and integrate cultures in order to be able to adapt to rapidly changing environments. Persistence: ↳ The ability to bounce back from difficulty and absorb, learn, and even re-invent. 41 The Resource-Based View: VRIO To sustain competitive advantage, resources and capabilities must meet four criteria: 1. They are valuable to the firm’s strategy (they help generate value/reduce cost). 2. They are rare (competitors don’t have them). 3. They are inimitable (they cannot easily be copied by competitors). 4. They can be organized by the firm (the firm can exploit the resources). This concept (resource-based view) will be discussed in greater detail in our Week 2 lecture. SEE HR Planning Today 1.3.3 “Culture as a Competitive Advantage” 42 Capabilities Core competencies: Organizational resources and capabilities that serve as a firm’s competitive advantage Dynamic capabilities: The ability to adapt and renew competencies in accordance with a changing business environment Note: people + processes = capabilities 43 Action Competitive advantage is achieved when the organization’s resources and capabilities are valuable, rare Can you think of any company – in Canada – that would fit this description? Prepare to discuss in class 44 SWOT SWOT analysis is a tool for analyzing a company’s resource capabilities and deficiencies, and its market opportunities and threats: Strengths Weaknesses Opportunities Threats 45 5. Determine the Competitive Position Value proposition: A statement of the fundamental benefits of the products or services being offered in the marketplace Michael Porter made a major contribution to the field of strategic management by grouping the ways organizations can compete into five generic competitive strategies – see next slide 46 5. Determine the Competitive Position: Porter’s Five Generic Competitive [Business] Strategies Low-cost provider strategy (Dollarama) Broad differentiation strategy (Apple, Costco) Best-cost provider strategy (more different, IKEA, Amazon, Netflix) Focused or market niche strategy based on lower cost (UPPER CLASS) Focused or market niche strategy based on differentiation (HIGH END) 47  Result of the Process of Strategy Formulation By the end of the strategy formulation process, the strategic management team has decided on: The organization’s corporate strategy The organization’s business strategy …..Next stage – strategy implementation 48 Source: https://www.videoblocks.com/video/female-ceo-entering-meeting-room-and-shaking-hands-with-employees-ehaoapr_lijjkcdgr Corporate Strategy, Business Strategy, Functional Strategy Corporate Functions within the HRD strategy Workflow process (through job analysis) HR planning Business strategy Recruitment & selection Training & development Health & safety Compensation Functional Industrial relations strategy Employment law 49 6. Implement the Strategy Strategy implementation: The process by which a strategy is put into action Program: Outlines the steps or activities necessary to accomplish the goal Procedures: The steps required to get the job done 50 7. Evaluate the Performance The successful implementation of a strategy is judged by the ability to meet financial targets such as profits, and the ability to meet benchmarked ratios of efficiency and effectiveness 51 Question..... An organization has just gone through a comprehensive review that created its mission, identified strategy, and developed 10-year performance goals. Which of the following principles has it used? a) Strategy formulation b) Objectives planning c) Long-term policy development d) Strategic intent 52 Benefits of Strategy Formulation Clarity Coordination Efficiency Incentives Adjustment Change Career Development These are benefits that accrue to all departments in the organization. 53 Question.... What is the product of the strategy called? a) The plan b) An HR strategy c) Strategic planning d) Objectives 54 Errors in Strategic Planning No process is without failures. Here are some of the errors that can occur in strategic planning Relegating the process to official planners, and not involving executives, managers, and employees, resulting in no buy-in Failing to use the plan as the guide to making decisions and evaluating performance Failing to align incentives and other HR policies to the achievement of the strategy 55 Understanding the Process It is the essential first step to creating an HR strategy that makes sense for the organization. By understanding strategies and business needs, HR professionals move from an administrative role to the role of strategic partner. 56 Summary HR professionals must appreciate the importance of strategic planning in their organizations By understanding strategy language and models, the HR professional can work with other executives to implement HR practices that enable strategy 57 Lecture Content - Disclosure Some slide content sourced from the slide lecture provided from Top Hat. 58